Accounting Theory for Mexico Necessitates- myassignmenthelp.com

Question: Discuss about theAccounting Theory for Mexico Necessitates Development. Answer: Introduction It is the companys duty to gather maximum revenues but without affecting its nearby areas, thereby prioritizing enhanced safety of the people. Thus, without disregarding the safety of the surrounding, companies cannot thrive in the long run. Moreover, in relation to BP Plc, the Gulf of Mexico necessitates development on a larger scale because it not only offers employment opportunities to five important states of U.S. but also acts as a home for innumerable aquatic species. After taking into account the oil spill that occurred in the Gulf of Mexico, it was found that the entire area was badly affected including several aquatic species. This was because of the irresponsible attitude of BP that raised many questions regarding the ineffective accounting ability on its part (Juhasz, 2011). The outcome of the spill necessitated massive compensation programs from the companys part and thus, it spent more than $37.2 billion in relation to such programs. Managerial Analysis The doctrine of corporate social responsibility is the fundamental duty that must be sincerely implemented by the companies in their working. Nonetheless, there have been many cases of failure to carry out their duties about social responsibility where the companies disappoint to demonstrate or to deliver and thereby create a big damage to the environment and creating problem to the mankind in the society (Slaper Hall, 2011). Corporate sustainability is a major concern in the present situation and it is the prime responsibility to take care of the earth and environment as it survives on the resources from the earth (Lahav, 2014). The recent case of BP oil spill is one such evident example where it has huge impact on the environment and society at large is a clear reminder for the failure on part of the company and the regulators to tighten the rules and regulations. Overview 4.9 million barrels of crude oil were leaked into the Gulf of Mexico, and this disaster was known as the BP Oil Spill or the Deepwater Horizon. Oil slicks and tar balls were the two major consequences which were faced by the disaster. Real Estate prices, Tourism and also the Fishing industry suffered a huge setback due to this oil spill. All this caused a business setback with many companies to be temporarily closed.This spill caused the oil price to grow instantly for a short interval followed by a massive. Ason 21 May 2010, the oil prices dropped massively to $68.03 compared to $86.19 on 3 May 2010. BP took the responsibility of restoring the area of the gulf, its surrounding ecosystem, and also the economy after the disaster took place. Restoration, cleanup and the compensation deals cost BP millions which included renovation of the ecosystem. As per the reports of the Sustainability 2010 it was found that Bp had to spent massive amount of $37.5 million only on compensation deals (Broder Krauss, 2011). Study The research report highlights the points which depict the loss of economic capital and the financial conditions of the company after the oil spill disaster (Adam, 2010). However the most important discussion would be of BP after that the environment will be discussed in which BP operates. It is also important to know about the companies which were directly affected by the oil spill. The financial loss or gain will also need to be ascertained; also a study needs to be made about the impact on the competitors, debtors, suppliers, etc along with the financial losses in terms of the damage, cleaning expenses, litigations on various issues, etc (Khatchadourian, 2011). Basically this study aims at finding out the financial impact that BP will have to suffer as because of the oil spill. Part of regulators It is the duty of the regulators to see that the people have faith in the company which can be assured by providing them with profits. The regulators should have a ready plan in the case of an emergency so as to create a balance. Also they need to maintain a balance while ascertaining the competitive interest. Competitive interest would include cheaper energy, energy security, etc. But in the case of BP it was seen that the regulators failed miserably which result in such losses and consequences. The biggest disaster in the US that is talked about is that of oil spill (Adam, 2010). The main reason ascertained is due to the irregular framework. The study revealed that there were numerous flaws in the regulatory system. Both the federal and the environmental regulations proved to be a failure. It was very clear that there was inefficient functioning of the management (Mason, 2010). The need of the public interest was also not take care of. Had there been control on the regulations of t he Government the oil spill would not had taken place. The regulatory authority did not have any back up plans or any reserve with them which could have helped BP to regain the position once again in the market. It is the responsibility of the regulators only to deal with the adverse situations however the failure of the regulators was the major problem in the case of oil spill (Dittrick, 2010). Implications of BP Market capitalization of BP was recorded as $186.20 billion whereas the share price of BP was recorded on $59.48 on April 19, 2010. Instantly the price of each share moved up from $59.58 to $60.48 which was very absurd if considered as per the consequences of the disaster. But this price was only for a short span as it was brought down by $4.78 which was evaluated to be 8.3% of the base price which previously existed in just one day (Clark, 2010). The price continued to get declined due to the highlight of consequences, and as a result the price went down as low as $27.02 which had a decline of 54.6%. A massive loss of $101.59 billion was recorded by the company for market capitalization as in comparison to the same on 20th April (Fodor Stowe, 2010). Conclusion Based on the scenario, several rules and regulations is the need of the hour so that the affairs of companies can be strictly supervised. Besides, government always gives due regard to such plans and policies. Further, attention must be given towards the concern that an efficient regulation theory can act as a safeguard to the abnormal functioning of companies. Hence, public interest theory is very important in this regard, as the BP oil spill played a role in acting as an illustration for other entities so that they can give due regard towards management policies and other statutory regulations. Nevertheless, it is important for BP to pay significant attention towards governance issues, rules, and regulations so that corporate responsibility can be given due consideration. Overall, this can assist in avoiding major issues so that a strong practice can be attained, thereby setting important examples for others as well. References Adam, D 2010, BP oil spill: death and devastation and it's just the start, viewed 23 September 2017 https://www.theguardian.com/environment/2010/may/31/bp-oil-spill-death-impact Broder, J. M Krauss, C 2011, Regulation of Offshore Rigs Is a Work in Progress, The New York Times, viewed 23 September 2017, https://www.nytimes.com/2011/04/17/us/politics/17regulate.html?pagewanted=all_r=0 Clark, A 2010, Gulf oil spill: Will Deepwater sink the 101-year-old BP?, viewed 23 September 2017 https://www.theguardian.com/environment/2010/jun/02/gulf-oil-deepwater-sink-bp Dittrick, P 2010, Investors ask firms to outline deepwater risks, spill-response plans, Oil and Gas Journal, vol. 108, no. 30, p. 26. Fodor, A Stowe, J.D 2010, The BP Oil Disaster: Stock and Option Market Reactions, Working Paper, Ohio University. Juhasz, A 2011, Black tide: the devastating impact of the Gulf oil spill, John Wiley and Sons, New Jersey Khatchadourian, R 2011, The Gulf war, Was there any heroes in the BP Oil Disaster, viewed 23 September 2017 https://www.newyorker.com/magazine/2011/03/14/the-gulf-war Lahav, A 2014, The ideas that underly BPs cert petition dont make sense, viewed 23 September 2017 https://neworleans.legalexaminer.com/toxic-substances/professor-lahav-the-ideas-that-underly-bps-cert-petition-dont-make-sense/ Mason, J.R 2010, The Economic Cost of a Moratorium on Offshore Oil and Gas Exploration to the Gulf Region, Working Paper :Louisiana State University. Slaper, T. F Hall, T. J 2011, The Triple Bottom Line: What Is It and How Does It Work? Indiana Business Review. vol. 86, no. 1, pp. 6-10.